3. Problem 23-2A Preparation and analysis of a flexible budget performance report LO P1, P2, A1

Phoenix Companys 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 16,000 units.

PHOENIX COMPANY Fixed Budget Report For Year Ended December 31, 2017
Sales				$	4,000,000
Cost of goods sold
Direct materials	$	960,000
Direct labor		320,000
Machinery repairs (variable cost)		64,000
DepreciationPlant equipment (straight-line)		330,000
Utilities ($48,000 is variable)		198,000
Plant management salaries		215,000			2,087,000
Gross profit					1,913,000
Selling expenses
Packaging		80,000
Shipping		112,000
Sales salary (fixed annual amount)		260,000			452,000
General and administrative expenses
Advertising expense		126,000
Salaries		251,000
Entertainment expense		110,000			487,000
Income from operations				$	974,000

Phoenix Companys actual income statement for 2017 follows.

PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2017
Sales (19,000 units)				$	4,828,000
Cost of goods sold
Direct materials	$	1,156,000
Direct labor		388,000
Machinery repairs (variable cost)		68,000
DepreciationPlant equipment (straight-line)		330,000
Utilities (fixed cost is $147,000)		203,500
Plant management salaries		225,000			2,370,500
Gross profit					2,457,500
Selling expenses
Packaging		92,000
Shipping		125,500
Sales salary (annual)		279,000			496,500
General and administrative expenses
Advertising expense		133,000
Salaries		251,000
Entertainment expense		113,500			497,500
Income from operations				$	1,463,500

Required: 1. Prepare a flexible budget performance report for 2017.